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Analysis: Mbeki’s ‘two nations’ hits the US

Analysis: Mbeki’s ‘two nations’ hits the US

Today it’s part of South African political lore, although back then its main effect was to offend Rainbow Nation sensibilities. Delivered in 1998, Thabo Mbeki’s “two nations” speech now has real relevance for America. A lead feature in the latest issue of The Atlantic magazine suggests why. By KEVIN BLOOM.

At the opening of the debate on “reconciliation and nation building” in the national assembly in May 1998, Thabo Mbeki, then South Africa’s deputy president, made a series of statements that were carefully designed to shatter the country’s Rainbow Nation dream. One of those statements, delivered about half-way through the speech, went like this: “We are neither impressed nor moved by self-serving arguments which seek to suggest that four or five years are long enough to remove from our national life the inheritance of a country of two nations which is as old as the arrival of European colonists in our country, almost 350 years ago.”

At the time, while white South Africa reeled at the potential implications, opposition parties were primarily concerned with Mbeki’s bleak conclusion that “neither were we becoming one nation”. The words and the reaction to them were perhaps the first big sign that the Mandela “miracle” years weren’t going to last past the inaugural administration; underneath the forgiveness and the flag-waving were certain structural truths that would have to be addressed.

Poverty was one such truth. Mbeki focused heavily on wealth disparity in the speech, arguing that it had clear racial, gender and spatial dimensions. What the future president didn’t mention, though, was South Africa’s inequality, an oversight that earned him repeated criticism in the years that followed. Writing in 2003, leading social researcher David Everatt noted that Mbeki’s omission was “odd,” given that in the late 1990s South Africa remained one of the most unequal societies on Earth.

“Inequalities in income distribution saw the Gini coefficient continue to rise in the 1990s despite the ANC’s avowed commitment to redistribution,” wrote Everatt. “In 1991, nine percent of the richest income decile was African, rising to 22 percent in 1996; the poorest remain obdurately and overwhelmingly black. Inequality has been ‘changing from being race to class based’ as a rich black elite has emerged and whites have become proportionately less wealthy. Put another way, only a small proportion of black South Africans is benefitting significantly from the post-apartheid economic dispensation. It seems apparent that reliance on market forces to achieve anything other than gradualist elite redistribution is misplaced.”

Eight years later, Everatt’s observations seem more germane than ever, and not just in a South African context. A lead feature in the latest issue of The Atlantic magazine takes the idea of “two nations” (the phrase that came to define Mbeki’s famous speech) to a new level. The feature’s author, Chrystia Freeland, acknowledges that there’s nothing particularly new in theories that draw attention to widening disparities in wealth and income – they’ve long been a favourite trope of political actors on the Left, she maintains, pointing to the “two Americas” theme in John Edwards’s 2004 and 2008 US presidential campaigns. But, according to Freeland, lately something has shifted. Her starting point is the remarkable fact that Alan Greenspan spoke the phrase “fundamentally two separate types of economy” in an interview on NBC in August last year. That would be the same Alan Greenspan who was a five-term chairman of the Federal Reserve, a libertarian defender of the free market, and one of America’s foremost fans of Ayn Rand.

So has Greenspan become a socialist in retirement, or might there be something else going on? Answering her own implied question, Freeland argues that the increasing concentration of wealth in the hands of a small and aloof group of rich people was a lot easier to ignore before the recession. Technological inventions like Google, Amazon and the iPhone made the lives of the middle class superficially better and easier, while financial inventions like subprime credit meant they could live as if they had more money than they actually did.

“But the financial crisis and its long, dismal aftermath have changed all that,” writes Freeland. “A multibillion-dollar bailout and Wall Street’s swift, subsequent reinstatement of gargantuan bonuses have inspired a narrative of parasitic bankers and other elites rigging the game for their own benefit. And this, in turn, has led to wider – and not unreasonable – fears that we are living in not merely a plutonomy, but a plutocracy, in which the rich display outsize political influence, narrowly self-interested motives, and a casual indifference to anyone outside their own rarefied economic bubble.”

The menace in this new state of affairs is enhanced through the comparison to the order that theoretically existed before the recession, the plutonomy. The term was coined by a group of Citigroup analysts in 2005, and is based on the assumption that there’s no longer such a thing as consumers affiliated to a nation-state, like American or British or German consumers; there are only supra-national “rich” consumers who account for a huge slice of international income and consumption, and then there are the rest, the millions of consumers worldwide that earn and purchase in surprisingly small amounts. Held up against the remote and indifferent – and sometimes actively derisive – members of Freeland’s plutocracy, the members of the plutonomy are inert and benign.

Here’s why: “[The plutocracy’s] members are hardworking, highly educated, jet-setting meritocrats who feel they are the deserving winners of a tough, worldwide economic competition – and many of them, as a result, have an ambivalent attitude toward those of us who didn’t succeed so spectacularly. Perhaps most noteworthy, they are becoming a transglobal community of peers who have more in common with one another than with their countrymen back home. Whether they maintain primary residences in New York or Hong Kong, Moscow or Mumbai, today’s super-rich are increasingly a nation unto themselves.”

In such a world, there’s no place for the hypothesis, a la Mbeki, that some people’s wealth is based on the poverty of others. Very few readers, least of all regular readers of The Daily Maverick, would make the assertion that the wealth of Bill Gates or Mark Zuckerberg has been unfairly earned. But the point, of course, is a little more subtle than that. As Freeland notes, Steve Jobs is neither the moral nor economic equivalent of the Russian oligarchs who joined the super-elite set by raping their country’s natural resources. Likewise, while the hedge fund managers who made billions during the crash have become the Satans of the West’s middle classes, Jobs, Gates and Warren Buffet remain figures of inspiration and renown.

Which then brings up the critical question: what to do about this supra-national, super-elite crew in a post-recession environment? After all, irrespective of how they’ve earned their money, their “nation” is doing just fine; it’s the real nations, the ones that hand out passports to people who can’t afford to go anywhere, that are struggling. In a framework, as Freeland suggests, where “isolation among like-minded peers” can lead to “obliviousness and indifference to the suffering of others,” are punitive measures like massive tax hikes and stringent financial regulations the answer? Would it be a good thing if rage at the bailed-out Wall Street bankers cohered into a populist agenda that pushed through protectionist legislation?

Freeland thinks not. TARP-recipient bankers aside, she writes, “America really does need many of its plutocrats. We benefit from the goods they produce and the jobs they create. And even if a growing portion of those jobs are overseas, it is better to be the home of these innovators – native and immigrant alike – than not. In today’s hypercompetitive global environment, we need a creative, dynamic super-elite more than ever.”

But, to echo Mbeki again, that kind of thinking – rational as it may be – is hardly going to bring America’s “two nations” closer together. As in South Africa, the income gap is widening; between 2002 and 2007, notes Freeland, 65 percent of all income growth in the United States went to the top one percent of the population. Things evened out in 2008 during the recession, and then in 2009 incomes at the summit rebounded more quickly than those below. “One example: after a down year in 2008, the top 25 hedge-fund managers were paid, on average, more than $1 billion each in 2009, quickly eclipsing the record they had set in pre-recession 2007.”

Freeland calls it the “winner-take-most” economy. Greenspan himself calls it a “national crisis”. It’s hardly a consolation, but maybe South Africa can call it proof that we’re not unique. DM

Read more: Statement of Deputy President Thabo Mbeki at the Opening of the Debate in the National Assembly, on “Reconciliation and Nation Building,” National Assembly Cape Town, 29 May 1998, The Rise of the New Global Elite, in The Atlantic.


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